In recent years companies have been computerizing many of their business activities. In many cases, this computerization involves developing new systems, including both computer hardware architectures and software applications, that achieve specific business goals. Often times these goals fall into either one or both of the following categories: increase worker productivity and improve record keeping capability.
To increase worker productivity, companies have developed computer systems that enable employees (users) to perform routine activities more quickly and efficiently than they could by hand or with earlier generations of computer systems. Concerning improving record keeping capability, companies have developed computer systems that not only record different types of business information, but also provide facilities to report that information to employees in a variety of ways depending upon the employee's function in the company.
Two functions in a company involve different, but related, activities. The first function, commonly referred to financial services, provides the financial record keeping activities, including keeping track of company income and expenses. Among these expenses is employee salaries, i.e., payroll. The second function, now referred to as human resources, provides the administrative personnel activities.
One of the more complex activities for financial services is creating a payroll. Related to this activity is keeping track of payrolls throughout the course of business cycles (e.g., payroll history by year). Creating and tracking payrolls is complex because of federal tax laws, state tax laws (which are different for each state), and in some cases local (e.g., county, city, or township) taxes. Another factor contributing to the complexity of payrolls is unions, which have specific rules associated with its members. For example, union members pay dues to the union by payroll deduction, but the company pays the union these dues directly.
With regard to tracking payrolls it is important to note that some taxes may vary throughout the year because of, for example, changes to the laws. Because of these complexities, many companies in the past have relied on the services of companies that specialize in providing payroll services. For example, company A would engage company B to provide payroll services, including creating the payroll for each pay period, printing salary checks, and tracking all payrolls. The drawback with this type of arrangement is that it can be expensive for a company to use specialty companies to handle payroll functions, particularly for small to mid-sized companies.
Alternatively, companies have either purchased (commercial) computer systems or developed their own computer systems that create and track payrolls. These company-developed payroll systems and commercial payroll systems provide adequate capabilities, but also at a high cost to the small to mid-sized companies. For example, to maintain commercial systems, companies have to enter into expensive service contracts with the manufacturer of these systems. Also, these manufacturers charge companies a lot of money to alter their systems to conform to the practice needs of customers. There are also high costs involved in developing and maintaining their own payroll systems, for example, the cost of personnel, i.e., computer engineers, programmers, etc.
The human resource ("H-R") activities include the hiring of new employees, as well as keeping track of each employee's progress (advancement) while with the company. H-R activities also include tracking employee benefits, which in many instances involves deductions from each employee's salary (e.g., employee contribution to health care coverage). Another H-R activity is tracking employee salary information (payroll history) on at least a yearly basis. This H-R activity overlaps with the corresponding payroll activity, though in the past it was separated by companies from the payroll activity.
Like with their payroll activities, companies have turned to computer systems to assist with H-R activities. In this regard companies have developed their own or purchased (commercial off-the-shelf) systems tailored to H-R activities. These company-developed H-R systems and commercial H-R systems suffer from substantially the same problems as the problems with payroll systems described briefly above.
Moreover, the problem with all existing systems, both payroll and H-R, is that they fail to recognize the overlapping information used by both financial and H-R functions of a company. They fail to provide a single, integrated system that provides all information to employees and provides the accounting and H-R activities, while restricting access to, for example, alter information related only to one or the other activity.